‘Quarantine 15’ and Other Helpful Items

As we are living through these unprecedented times, I’m trying to hold some gratitude in my heart for how much our recordkeeping skills are needed right now. Of course, some (many?) days I am really thinking, for goodness sake, when is this going to end!? And how can one woman eat that many snacks? One of our Fine Point team members coined the phrase, “the Quarantine 15” and I tell ya, it’s a real thing. Ok, back to business!

With the multiple small business funding options and payroll tax credits out there, and the continuing guidance and clarifications being issued, it’s a full-time job just keeping track of everything. I have a few helpful items for you to review this month, based on the most common questions we are getting from our customers.

 

CEO, Fine Point Consulting

 


Make the Most of Your PPP Funding

As you can imagine, we’ve had our heads down the last couple of weeks, helping customers calculate and apply for the PPP funds, as well as working through alternatives with them. So…what’s next?

Get a plan in place right now for how you intend to use those funds. Your current primary goal should be to maximize the loan forgiveness amount. Once the SBA approves you, your bank has 10 days to fund the loan. And when you do receive those funds, the 8-week time period stipulated in the loan details officially begins.

You will need to be prepared with documentation that shows how you are spending those funds during that 8-week period. I recommend you create a separate balance sheet account to keep track of the PPP loan funds and how they are spent. You don’t need a separate physical bank account if you track your funds properly in your accounting system. Businesses are subject to criminal penalties for misrepresenting either the spending or use of the loan, so take this seriously.

To qualify for loan forgiveness, you must use at least 75% of the funds for payroll costs, with the other 25% of the funds used for rent, interest payments on mortgages, and utilities. You also need to pay attention to your FTE compared to your base period. Review compensation for employees to ensure that you don’t reduce their pay beyond 25% of the base amount. Doing so will reduce eligibility for loan forgiveness.

Payments for paid leave benefits under the Families First Coronavirus Response Act are NOT an allowable use of your PPP funds. Again, solid recordkeeping and using your accounting tools properly will help you keep track of these items with ease.

You should get guidance from your individual bank on what documentation they will require from you, so you are prepared.
Other options for maximizing forgiveness:

  • Ask your banker to time the origination of the loan to help you best maximize your ability to spend funds
  • Adjust payroll dates if you can, to maximize payments during the 8-week period
  • Consider paying bonuses to employees who have demonstrated superior job performance during the crisis (but remember compensation above $100k does not count toward loan forgiveness)
  • Make catch-up payroll payments to any employees whose compensation was reduced as a result of the crisis
  • Make early payments on rent, mortgage interest, or utilities (up to 25% of your loan)

As always, monitor the SBA website for any updates on loan forgiveness and any additional clarification of the rules.

 


Can You Receive PPP Funds and Also Use the Other Tax Credits?

FFCRA Credits. Employers will receive payroll tax credits if they pay employees under the new sick leave or expanded FMLA leave rules put in place with the Families First Act. Employers are allowed to receive PPP funds and also take advantage of these credits. However, you cannot include those leave costs in your PPP forgiveness calculation.

Employee Retention Credit. This is a refundable tax credit of 50% of up to $10,000 in wages paid by an employer who has been financially impacted by COVID-19. You cannot receive this credit and also receive PPP funds.

Employer Payroll Tax Deferral. This provision of the CARES Act allows employers to defer the payment of the employer’s share of social security taxes. Businesses with loan amounts that have been forgiven are ineligible to participate in this deferral program. However, employers can defer until they receive a decision from their lender that any portion of the PPP loan has been forgiven.

Again, keep an eye out to see if additional clarification is published on these rules.

 


Implementing the FFCRA Required Sick Leave and How Do Businesses Get the Tax Credits?

We have a set of procedures, a sample policy, and a sample “Emergency Time Off Request Form” that we’ve developed for our customers. If you are reading this and would like a copy, let us know.

Your payroll provider should have already been in contact with you on how they are handling these leave codes. Your tax credit will be calculated based on those codes, so it’s vital that you understand how to use them. You will need one code for the sick leave coverage and another for the expanded FMLA coverage.

1. Employee notifies Employer of a need for time off related to COVID-19

2. Employer sends the employee the Emergency Time Off Request Form, which is necessary to comply with the business reporting and documentation requirements set by the Department of Labor

  • If an employee has COVID-19 or COVID-19 symptoms, ask if they have been in close contact with other employees; close contact is defined by the CDC as “being within approximately 6 feet of a COVID-19 case for a prolonged period of time”
  • If the employee has been in close contact, the employer should notify employees without giving the identity of the affected employee.  Exposed individuals should self-quarantine.
  • All employee information is to be kept confidential and documentation should be kept in a separate file

3. When processing regularly scheduled payroll, use the appropriate COVID-19 leave codes to pay employees on leave

  • Ensure pay codes for the different types of COVID-19 leave are set up in your payroll system
  • Use of the proper leave codes is what will trigger the calculation of the tax credit to the employer
  • For most payroll providers, the federal tax normally debited from the employer’s account will be decreased by the amount of the tax credit due
  • If the employer’s credit due exceeds the amount of federal tax, the remaining credit will be calculated on the quarterly Form 941

4. When employee is ready to return to work, a doctor’s note giving approval may be required


Working from Home is a Transition – You’ve Got This!

So, you’re suddenly working remotely, while it’s always been something you’ve imagined doing, this life-transition happened so fast - now what? How do you stay productive, creative, and inspired, and live up to those lofty work expectations?

Here are 8 Tips to Get You Started:

1. Consider your Workspace

Set yourself up for success in a place where you can focus on the tasks at hand. Create a designated spot for work at home, make sure that you feel motivated by your environment, and ready to tackle whatever comes your way. Set ground rules with others in your home for when you work. If you have children, they need clear rules about what they can and cannot do while you’re working. Of course, if you have kids or pets schedule in time to take care of their needs.

2. Reliable Technology

Reliable WiFi is integral to your success, but there’s more to a successful setup than an internet connection. Along with having the ability to make video calls without losing connection, you should consider what tools and tech you’ll need to do your job well. Homelife can be noisy! Many remote workers invest in a great pair of noise-canceling headphones so that they can take their work anywhere - regardless of background noise.

3. Don’t Hesitate to Ask for What You Need

Going hand in hand with Reliable Technology, if you’re working for a company remotely, make sure you request all the equipment needed to do your job correctly. Be heard! It’s important to set precedents early that you will ask for what you need to get your job done comfortably.

4. Have a Routine

Step one - set your alarm (or, listen to your dog banging around his food bowl). Remember, just because we can lounge around in our pajamas, doesn’t mean we should. A good routine may be to take a shower, catch up on the news, don’t forget to eat breakfast, get dressed and maybe even take a short walk before you set up in front of your computer for the day.

5. Communicate

Communication is the key to success in any profession. When it comes to remote work, it is an even more critical asset. Schedule meetings to connect on your goals, upcoming projects, and daily tasks. Don’t forget to advocate for yourself and clearly state the progress you’ve made. Now more than ever, keeping in touch is a necessary survival skill in both personal and work life.

6. Be Positive

When you work remotely, be positive, to the point where it may feel like you’re overly positive. While it’s always important to stay professional, we all know how “to the point” emails and texts can be misconstrued. Take a second glance at your wording – get your point across without offending your coworkers or clients. Embrace the exclamation point or emoji!

7. Take time for self-care

When the line between “work” and “home” starts to blur, you might find yourself stuck to your computer screen for a more extended period (see next point). While that can sometimes be necessary when closing a significant deal or finalizing a vital presentation, give yourself time for, well, you. Commit to your fitness routine and make sure that you’re creating blocks in your schedule to eat healthy, nutritious meals so that you can be focused and productive when you need to be.

8. Know when to “log off”

Logging off for the day can be one of the most challenging aspects of remote work. Though you may receive emails and chat notifications at any hour, it’s essential to develop a habit of setting a time when you officially “log off” for the night.
Now that you’re working remotely, even if for a short time, life will look a little bit different. The most successful remote employees have a reputation for being extremely disciplined. After all, it takes serious focus to do any full-time office job from an unconventional space. That said, everyone lets their attention drift sometimes. Go easy on yourself. We’re all human!


Germ Fighting Without Soap Due to Taxes? Well, that Stinks!

In the age of COVID-19 we understand more than ever that germs can spread disease, and that hand washing can help defend against it. It’s safe to say that soap can be found in every household. Can you imagine life without it?

The use of soap for personal cleanliness dates way back. It became increasingly common from 200 A.D onwards. In modern times, the use of soap in industrialized nations is viewed as a basic necessity.

Over the centuries, various tax laws have caused much turmoil in our lives! One such law, a high tax on soap, was the source of much angst in England during the 1700s and into the 1800s.

In 1712, England introduced the wildly unpopular soap tax on the manufacture of soap. It tripled the price of basic soap! The soap tax resulted in making soap a luxury item and unaffordable for most. It wasn’t until the tax was repealed in the mid-1800s that the working classes could afford to use soap!

The soap tax was a huge source of revenue for the government. Naturally, the soap manufacturing process was closely supervised by revenue officials. Their job was to ensure that the soap makers' equipment was kept under lock and key when not being supervised.

As a result, the soap tax drove many soap makers out of the country. Many of them immigrated to countries such as Ireland where soap was exempt from tax. In addition, the tax resulted in widespread soap smuggling to avoid the tax. Not a moment too soon, the soap tax was repealed in 1853.


Fine Point Consulting is a boutique consulting firm offering expert-level professional accounting & human resources services customized to meet your budget. We help entrepreneurs who are trying to scale fast get more done and stay lean.

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